Podcast
Questions and Answers
Which of the following is NOT a commonly used export document?
Which of the following is NOT a commonly used export document?
- Certificate of origin
- Sales receipt (correct)
- Bill of lading
- Commercial invoice
Free Trade Zones (FTZs) are primarily used to increase customs duties.
Free Trade Zones (FTZs) are primarily used to increase customs duties.
False (B)
Name one example of a regional trade agreement.
Name one example of a regional trade agreement.
United States-Mexico-Canada Agreement (USMCA)
Political restrictions on trade can include tariffs and ____________________.
Political restrictions on trade can include tariffs and ____________________.
Match the following trade agreements with their member countries or regions:
Match the following trade agreements with their member countries or regions:
Which Incoterm stands for 'Cost, Insurance and Freight'?
Which Incoterm stands for 'Cost, Insurance and Freight'?
Absolute accuracy is crucial in domestic documentation more than in international documentation.
Absolute accuracy is crucial in domestic documentation more than in international documentation.
What are macroenvironmental influences?
What are macroenvironmental influences?
The limitation on the amount of a product that may be imported from a country is known as an ___________.
The limitation on the amount of a product that may be imported from a country is known as an ___________.
What is a common reason for implementing tariffs?
What is a common reason for implementing tariffs?
Which of the following is NOT an international market entry strategy?
Which of the following is NOT an international market entry strategy?
Exporting offers the highest risk among international market entry strategies.
Exporting offers the highest risk among international market entry strategies.
What is the primary advantage of joint ventures in international market entry?
What is the primary advantage of joint ventures in international market entry?
The procurement of goods and services from foreign sources is known as _____
The procurement of goods and services from foreign sources is known as _____
Match the advantage of licensing with its corresponding disadvantage:
Match the advantage of licensing with its corresponding disadvantage:
What percentage of the world population did the top ten countries represent in 2050?
What percentage of the world population did the top ten countries represent in 2050?
Licensing agreements can easily be terminated.
Licensing agreements can easily be terminated.
What is the main disadvantage of owning a foreign firm?
What is the main disadvantage of owning a foreign firm?
Achieving economies of scale can give a company an advantage in maintaining a _____ position.
Achieving economies of scale can give a company an advantage in maintaining a _____ position.
Match the population year with the total population in thousands:
Match the population year with the total population in thousands:
What is a significant issue organizations may face when importing?
What is a significant issue organizations may face when importing?
Nearshoring refers to locating suppliers far from the domestic company.
Nearshoring refers to locating suppliers far from the domestic company.
What is an advantage of exporting?
What is an advantage of exporting?
Ownership gives a firm the _____ degree of control over its supply chain strategies.
Ownership gives a firm the _____ degree of control over its supply chain strategies.
Match each market entry strategy with its correct description:
Match each market entry strategy with its correct description:
Why is absolute accuracy crucial in international documentation?
Why is absolute accuracy crucial in international documentation?
What is the main purpose of Free Trade Zones (FTZs)?
What is the main purpose of Free Trade Zones (FTZs)?
Which term of shipment indicates that the seller covers both cost and insurance during transport?
Which term of shipment indicates that the seller covers both cost and insurance during transport?
What is an example of a non-tariff barrier in international trade?
What is an example of a non-tariff barrier in international trade?
Which of the following agreements includes Canada, the United States, and Mexico?
Which of the following agreements includes Canada, the United States, and Mexico?
Macroenvironmental influences on organizations include which of the following factors?
Macroenvironmental influences on organizations include which of the following factors?
How do regional trade agreements benefit supply managers?
How do regional trade agreements benefit supply managers?
What is a common impact of currency fluctuations on trade?
What is a common impact of currency fluctuations on trade?
What is the function of an inspection certificate in international trade?
What is the function of an inspection certificate in international trade?
Which of the following best describes an embargo?
Which of the following best describes an embargo?
What is the most common method of international market entry?
What is the most common method of international market entry?
What is a major disadvantage of licensing agreements?
What is a major disadvantage of licensing agreements?
Which of the following is an advantage of joint ventures?
Which of the following is an advantage of joint ventures?
What is the primary risk associated with ownership as an international market entry strategy?
What is the primary risk associated with ownership as an international market entry strategy?
What does nearshoring refer to in the context of importing?
What does nearshoring refer to in the context of importing?
What advantage does exporting provide for a company?
What advantage does exporting provide for a company?
What is a commonly cited disadvantage of importing?
What is a commonly cited disadvantage of importing?
What is a common outcome of achieving economies of scale in international markets?
What is a common outcome of achieving economies of scale in international markets?
What does an agreement in licensing allow a firm to do?
What does an agreement in licensing allow a firm to do?
What is a limitation of joint ventures?
What is a limitation of joint ventures?
What can be a significant issue when exporting goods?
What can be a significant issue when exporting goods?
Which of the following best describes the advantage of ownership in market entry?
Which of the following best describes the advantage of ownership in market entry?
What might be a challenge when a company employs licensing as a strategy?
What might be a challenge when a company employs licensing as a strategy?
What is one key factor that influences a company’s decision to enter international markets?
What is one key factor that influences a company’s decision to enter international markets?
International documentation is simpler than domestic documentation.
International documentation is simpler than domestic documentation.
Absolute accuracy in documentation is important to avoid additional costs or delays.
Absolute accuracy in documentation is important to avoid additional costs or delays.
FTZs are areas that might increase customs duties on imported products.
FTZs are areas that might increase customs duties on imported products.
The United States–Mexico–Canada Agreement (USMCA) involves three countries.
The United States–Mexico–Canada Agreement (USMCA) involves three countries.
Political factors in international trade can include embargoes.
Political factors in international trade can include embargoes.
Currency fluctuations positively impact trade volumes at all times.
Currency fluctuations positively impact trade volumes at all times.
Incoterms are terms of shipment that help clarify responsibilities in international shipping.
Incoterms are terms of shipment that help clarify responsibilities in international shipping.
The term 'CIF' stands for 'Cost, Import, and Freight.'
The term 'CIF' stands for 'Cost, Import, and Freight.'
The macroenvironmental influences include factors such as cultural, economic, and technological aspects.
The macroenvironmental influences include factors such as cultural, economic, and technological aspects.
Underutilization is common among most Free Trade Zones.
Underutilization is common among most Free Trade Zones.
Exporting is the least common method of international involvement.
Exporting is the least common method of international involvement.
Licensing agreements are easily terminated quickly.
Licensing agreements are easily terminated quickly.
A joint venture requires the combination of multiple firms to create a new entity.
A joint venture requires the combination of multiple firms to create a new entity.
Ownership as an international market entry strategy offers the lowest potential reward.
Ownership as an international market entry strategy offers the lowest potential reward.
Nearshoring refers to locating suppliers and vendors far from the domestic company.
Nearshoring refers to locating suppliers and vendors far from the domestic company.
The advantages of exporting include greater flexibility and reduced risk.
The advantages of exporting include greater flexibility and reduced risk.
A major disadvantage of licensing is the risk of the licensee becoming a future competitor.
A major disadvantage of licensing is the risk of the licensee becoming a future competitor.
Greater knowledge of the international market is required in joint ventures when the domestic firm is involved.
Greater knowledge of the international market is required in joint ventures when the domestic firm is involved.
Importing involves the procurement of goods from domestic sources only.
Importing involves the procurement of goods from domestic sources only.
The domestic firm has complete control over its marketing when using licensing as a market entry strategy.
The domestic firm has complete control over its marketing when using licensing as a market entry strategy.
Flexibility is higher in ownership as an international market entry strategy.
Flexibility is higher in ownership as an international market entry strategy.
Economic barriers are significant issues organizations face when engaging in international importing.
Economic barriers are significant issues organizations face when engaging in international importing.
A major advantage of ownership is its requirement for a high degree of control over supply chain strategies.
A major advantage of ownership is its requirement for a high degree of control over supply chain strategies.
Competitive difficulties are an advantage of exporting.
Competitive difficulties are an advantage of exporting.
Flashcards
Export Documentation
Export Documentation
International export documents needed for trade; detailed and accurate to avoid delays or extra costs.
Incoterms
Incoterms
International commercial terms defining responsibilities and costs in international shipping.
Free Trade Zone (FTZ)
Free Trade Zone (FTZ)
Area where import duties can be postponed or reduced, facilitating value-added activities and exports.
Regional Trade Agreements
Regional Trade Agreements
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USMCA
USMCA
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Political Restrictions
Political Restrictions
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Tariffs
Tariffs
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Import Quota
Import Quota
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Macroenvironmental Influences
Macroenvironmental Influences
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Currency Fluctuations
Currency Fluctuations
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Global Supply Chain Management
Global Supply Chain Management
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Market Potential
Market Potential
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Geographic Diversification
Geographic Diversification
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Exporting
Exporting
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Licensing
Licensing
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Joint Venture
Joint Venture
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Foreign Ownership
Foreign Ownership
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International Market Entry Strategies
International Market Entry Strategies
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Importing
Importing
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Global Sourcing
Global Sourcing
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Advantages of Exporting
Advantages of Exporting
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Disadvantages of Exporting
Disadvantages of Exporting
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Advantages of Licensing
Advantages of Licensing
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Disadvantages of Licensing
Disadvantages of Licensing
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Advantages of Joint Ventures
Advantages of Joint Ventures
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Disadvantages of Joint Ventures
Disadvantages of Joint Ventures
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Advantages of Ownership
Advantages of Ownership
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Disadvantages of Ownership
Disadvantages of Ownership
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International Documentation
International Documentation
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Incoterms
Incoterms
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Free Trade Zones
Free Trade Zones
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Regional Trade Agreements
Regional Trade Agreements
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Political Restrictions
Political Restrictions
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Tariffs
Tariffs
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Import Quota
Import Quota
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Macroenvironmental Influences
Macroenvironmental Influences
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Currency Fluctuation
Currency Fluctuation
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Market Size
Market Size
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Global Supply Chain Management
Global Supply Chain Management
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Market Potential
Market Potential
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Geographic Diversification
Geographic Diversification
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Exporting
Exporting
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Licensing
Licensing
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Joint Venture
Joint Venture
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Foreign Ownership
Foreign Ownership
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International Market Entry Strategies
International Market Entry Strategies
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Importing
Importing
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Global Sourcing
Global Sourcing
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Advantages of Exporting
Advantages of Exporting
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Disadvantages of Exporting
Disadvantages of Exporting
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Advantages of Licensing
Advantages of Licensing
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Disadvantages of Licensing
Disadvantages of Licensing
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Advantages of Joint Ventures
Advantages of Joint Ventures
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International Documentation
International Documentation
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Incoterms
Incoterms
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Free Trade Zones
Free Trade Zones
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Regional Trade Agreements
Regional Trade Agreements
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Political Restrictions
Political Restrictions
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Tariffs
Tariffs
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Import Quota
Import Quota
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Macroenvironmental Influences
Macroenvironmental Influences
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Currency Fluctuation
Currency Fluctuation
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Market Size
Market Size
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Global Supply Chain Management
Global Supply Chain Management
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Market Potential
Market Potential
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Geographic Diversification
Geographic Diversification
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Exporting
Exporting
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Licensing
Licensing
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Joint Venture
Joint Venture
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Foreign Ownership
Foreign Ownership
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International Market Entry Strategies
International Market Entry Strategies
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Importing
Importing
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Global Sourcing
Global Sourcing
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Advantages of Exporting
Advantages of Exporting
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Disadvantages of Exporting
Disadvantages of Exporting
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Importing/Global Sourcing
Importing/Global Sourcing
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Study Notes
Supply Chain Management
- Global Supply Chain Management is a chapter topic.
- Amelia Abernathy is the presenter/author.
World Economic Forum
- A link is provided to a particular agenda.
Top 20 Retailers by Revenue in 2024
- Walmart has a revenue of $628.6B.
- Amazon has a revenue of $355.1B.
- Schwarz has the highest international revenue with $119.9 billion.
- Ikea has the highest share of international revenue (97%).
- Tesco has the most locations globally with over 40,000 stores.
Factors Influencing a Company's Decision to Enter International Markets
- Market potential
- Geographic diversification
- Excess production capacity
- Advantage of low-cost position due to economies of scale
- Products near the end of their lifecycle in the domestic market
- Source of new products and ideas
- Foreign competition in the domestic market
Population = Labor
- 2000 Population: 3,598,744 thousand people (in thousands).
- 2010 Population: 4,011,898 thousand people (in thousands).
- 2019 Population: 4,358,102 thousand people (in thousands).
- 2050 Expected Population: 5,070,409 thousand people (in thousands).
- Top 10 Countries make up 59% of the world population in 2000.
- The total world population in 2000 is approximately 6,086,149 thousand people.
- The total world population in 2020 is approximately 6,872,671 thousand people.
- The total world population in 2019 is approximately 7,560,290 thousand people.
International Market Entry Strategies
- Exporting (most common).
- Licensing (agreement between firms).
- Joint Ventures (combination of firms).
- Ownership (financial control).
Advantages and Disadvantages of Exporting
-
Advantages:*
-
Greater flexibility
-
Less risk
-
Gain experience
-
Test a market for its viability
-
Product is produced in the domestic market
-
Disadvantages:*
-
Competitive difficulties
-
Currency exchange rates
-
Domestic firm has little control over marketing mix in foreign market
-
Knowledge of regulations required
-
Compliance issues
US Major Exports
- Aircraft are a top export in 14 states (28%).
- Aerospace & Defense exports to Germany, France, Canada, the UK, and Japan alone amounted to $36.1 billion (Aerospace Industries Association).
Advantages and Disadvantages of Licensing
-
Advantages:*
-
Does not require capital outlays.
-
Risk levels are reduced.
-
Increased flexibility.
-
Good option when foreign markets have high tariff barriers or import quotas.
-
Disadvantages:*
-
Licensing agreements cannot be terminated quickly.
-
Licensee can become a future competitor.
-
Risk of licensee bankruptcy or acquisition by another company.
Advantages and Disadvantages of Joint Ventures
-
Advantages:*
-
Domestic firm provides significant management input.
-
Good strategy for wholly-owned subsidiaries when foreign gov't prohibits.
-
Disadvantages:*
-
Risks are higher.
-
Flexibility is lower.
-
Greater knowledge of the international market is required.
Advantages and Disadvantages of Ownership
-
Advantages:*
-
Highest potential reward.
-
High degree of control of supply chain strategies and tactics.
-
Minimizes start-up costs when acquiring existing companies.
-
Company can compete more effectively on price.
-
Disadvantages:*
-
Most risky market entry strategy.
-
Requires greater knowledge of international marketing.
-
Company is fully responsible for all marketing & supply chain activities and processes.
-
Potential for government nationalization of industry.
Importing and Global Sourcing
- Procurement of goods/services from foreign sources.
- Significant government regulations & locating suppliers close to company (nearshoring).
US Major Imports
- Petroleum leads as the most valuable import (24%).
Over 50% of 2023 US trade involved:
- Mexico
- Canada
- China
- Germany
- Japan.
US Imports vs. Exports
- The US Imported more than exported to 15 of the top 20 trade partners.
America's Trading Partners
- Import data.
- Export data.
- Trade balance data (US deficit).
- Data comparison based on 2021 and 2022.
Documentation
- International documentation is complex.
- Absolute accuracy is critical to avoid costs and delays.
- Useful documents for international trade include certificates of origin, commercial invoices and more.
Incoterms
- Standardizes rules of global trade procedures.
Terms of trade
- International trade shipping terms.
Free Trade Zones
- Areas where companies can postpone or reduce customs duties.
- Usually located at ports.
- Levels of development vary.
Regional Trade Agreements
- Efforts to reduce barriers, global trade agreements.
- Implications for supply management in trading countries.
Examples of Regional Trade Agreements
- USMCA
- EU
- ASEAN
- Mercosur
- China's Trade Agreements
Macroenvironmental Influences
- Uncontrollable forces like: cultural, demographic, economic, natural, political, and technological factors.
Political Factors
- Tariffs (to protect domestic business).
- Nontariff barriers (restrictions other than tariffs).
- Import quotas (limiting the amount).
- Embargoes (prohibiting trade).
Political Factors (Examples)
- Brexit (Britain's withdrawal from EU).
Economic Factors
- Currency fluctuations (impact on trade).
- Tradeoff of import/export volumes.
- Market Size.
- GDP per capita.
- Infrastructure (e.g., airport runways).
- Labor-intensive management (labor costs).
Culture Factors
- Language (use of symbols & writing styles).
- National holidays & observing them.
- Time orientation (time perception and culture).
- Business practices.
- Cultural norms
A Package Marked for Export
- Information on the package (handling marks, cautionary marks, consignee's mark, destination etc).
Bribery and Global Commerce
- Data on countries and bribery rates.
Questions?
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